CDN 2017-04-24 Item 2A - Ordinance - Multi-Family Residential Property Tax (MFTE)

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City of Tukwila Allan Ekberg, Mayor INFORMATIONAL MEMORANDUM TO: Community Development and Neighborhoods Committee FROM: Jack Pace, DCD Director BY: Lynn Miranda, Senior Planner CC: Mayor Ekberg DATE: April 19, 2017 SUBJECT: An Ordinance amending TMC 3.90 Multi-Family Residential Property Tax Exemption ISSUE Under TMC 3.90, applications for multi-family tax exemptions offered as an incentive to stimulate the construction of new housing in limited areas in the Tukwila Urban Center were no longer accepted after December 31, 2016. The Council is being asked to consider and approve an ordinance amending TMC 3.90 to extend the deadline to apply for the property tax exemption until December 31, 2017. BACKGROUND Tukwila City Council adopted Ordinance 2462 in 2014 allowing the use of the Multifamily Property Tax Exemption (MFTE) as an incentive to encourage residential development of market rate and affordable housing within a portion of the Southcenter area zoned Transit Oriented Development(TUC-TOD) located west of the Green River. If a project met certain State eligibility criteria set forth in RCW 84.14, the qualified residential units would be exempt from ad valorem property taxes for eight years; twelve years if providing.affordable housing. The property tax exemption applies to the qualified housing units only, not on the value of land or commercial properties. Once the exemption period ends, the structures are placed on the property tax rolls based on their original new construction value. The intent was to stimulate the construction of pioneer multifamily developments in the urban center, not to provide an on-going subsidy. Per TMC 3.90.060.D, the deadline for applying for the property tax incentive was December 31, 2016. Washington Place is the only project that utilized the MFTE program. DISCUSSION The Southcenter Plan describes the TOD district as an emerging mixed-use, residential neighborhood. The City has invested in this vision with improvements such as the transit center, the pedestrian bridge over the Green River, and upcoming changes to Baker Boulevard including new sidewalks, on-street parking, and bike lanes. These public improvements combined with the MFTE incentive served to catalyze the first residential project for the urban center, Washington Place. Staff believes extending the multifamily property tax exemption application period for a limited time is a necessary incentive to construct additional housing in the urban center. Recently, 1